2 ASX dividend stocks to watch (and where to look for special dividends)

August reporting season is when ASX listed companies hand in their FY26 report card - sales, profits, and guidance for the year ahead.

This year, earnings came in slightly ahead of expectations and dividends surprised the market to the upside. This played out against a backdrop of strengthening corporate balance sheets, giving boards more capacity to return capital and lifting payout ratios as boards grew more comfortable returning capital to shareholders.

Here’s the Solaris Australian Equity Income team’s wrap of the dividend winners and losers from the August reporting.

Two emerging dividend darlings?

Ampol (ASX: ALD) delivered the headline number of the season: a full-year dividend more than 400% larger than the prior year, on the back of strong refining markets.

Management at Ampol has done as exceptional job in steering the business through a period of volatile global oil markets, while reinvesting to grow earnings through the acquisition of EG Group during the period.

Virgin Australia (ASX: VGN) impressed with a maiden fully franked dividend of 7.6 cents per share – its first since relisting, from a business that was in voluntary administration in 2020.

This is an important milestone for Virgin following re-listing, and came much sooner than the market anticipated providing a strong signal from the board.

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Specials are the new buybacks

The structural story of this season sits in the special dividends.

Since the tax treatment of off-market buybacks changed in October 2022, specials have become the main release valve for surplus franking credits.

This season, Challenger (ASX: CGF), Suncorp (ASX: SUN) and Bank of Queensland (ASX: BOQ) all paired ordinary and special dividends with an on-market buyback – a powerful trifecta of shareholder returns.

But there’s a catch. You need to own these companies before the announcement.

Our analysis of the special dividends paid since October 2022 highlights that buying after the announcement has, on average, underperformed the market by more than 4% over the following 45 trading days. 

Put simply, the income arrives at the expense of capital.

As you can see in the chart below, capturing specials requires forecasting both the ability and the willingness of companies to return surplus capital – and being positioned ahead of the announcement

 

The traps that snapped

A strong season is not a safe season.

Lendlease (ASX: LLC), Beach Energy (ASX: BPT) and Atlas Arteria (ASX: ALX) all disappointed income investors this August. We avoided all three.

Atlas is instructive - it owns a genuinely high-quality portfolio of toll roads that the market arguably undervalues. But we have questioned the sustainability of its dividend for some time, and governance risks are building with the board no longer committing to a 40cps level of dividend into the future.

The yield lesson repeats every season... Headline yield tells you what a company paid in the past. It tells you nothing about what it will pay in the future.

The takeaway for income investors

August 2026 confirmed the dividend landscape has structurally changed.

Payout ratios are rising, maiden payers are emerging, and specials (not off-market buybacks) are how boards now return surplus franking to shareholders.

None of this can be captured with a trailing yield screen. It requires forward-looking forecasts of income, franking and capital growth, stock-by-stock, across the market.

Deep fundamental research and forecasting is the engine behind the Solaris Australian Equity Income Fund, and the same strategy that drives Solaris Australian Equity Income Plus Ltd (ASX: SET) – our listed investment company paying monthly, fully franked dividends.

Click here to learn more about SET on the Solaris website.

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